How can machine tool builders capture value from smart services? Avoiding the service and digitalization paradox

Abstract

PurposeThis paper aims to assess the existence of, or the risk of running into, a smart service paradox for industrial firms and how to overcome it.Design/methodology/approachA qualitative multiple case study is conducted involving four machine tool builders. The main source of data is formed by semi-structured interviews with service business managers. NVivo software was used to structure the interview harvest.FindingsThe findings reveal that a smart service paradox is a realistic threat for industrial firms, that smart service business development is a supply push affair rather than a matter of demand pull, that two types of permissions need to be granted by prospective users (license to operate and license to charge) and that three intermediate steps need to be undertaken and validated to overcome a smart service paradox: value testing or proofing; value recognition; and value sharing.Research limitations/implicationsThis study was vendor-centric and did not involve the industrial customers to whom the smart services were directed. It was based on a small sample, which limits the generalizability of findings to a broader or different (sectoral) context.Practical implicationsLessons are identified for service managers on how to circumvent a smart service paradox.Originality/valueThis study departs from a value creation-delivery-capture (“business model”) perspective to assess smart service paradox dynamics. By adopting a relational perspective to it, the present paper succeeds in presenting a more granular version of the base business model.